Allen Stanford Ponzi Scheme

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Convicted Ponzi-schemer R. Allen Stanford has just been sentenced to 110 years in prison, marking the latest chapter in a case that has captivated parts of the financial world for three years.

Allen Stanford Sentencing: The Arguments From Both Sides

June 14, 2012, 1:10 PM
http://blogs.wsj.com/deals/2012/06/14/allen-stanford-sentencing-the-arguments-from-both-sides/

Convicted Ponzi-schemer R. Allen Stanford has just been sentenced to 110 years in prison, marking the latest chapter in a case that has captivated parts of the financial world for three years.

The government has come down on Stanford as more than just some white-collar criminal. In a blistering sentencing proposal, prosecutors sought a life sentence of 230 years for Stanford, calling him a “ruthless predator responsible for one of the most egregious frauds in history.”

Stanford, however, sought only “time served” according to the government’s filings. He maintains that his operations were not, in fact, a Ponzi scheme at all, given he was actually investing the money in real-estate and other properties.

That left a wide gap of time and beliefs between the two sides, and the court came down at 110 years.

Here are some of the more memorable points from their filings about the sentencing.

From the government’s page-turning memo:

The broad description– For more than twenty years, Stanford orchestrated an epic, multibillion dollar fraud to indulge an extraordinarily lavish lifestyle and to finance a personal business empire, with devastating consequences for thousands of victims who entrusted him with their savings.

A big per diem– By 2008, Stanford was stealing $1 million a day from the bank to keep his failing personal businesses open

Using his own words against him 1– During the fraud, Stanford boasted he was the “hardest working person at the company” in a speech delivered to employees in Antigua. He was certainly the hardest working person in the fraud– at every step, from the marketing materials to the faked financials to the bank transfers, Stanford was in charge and the prime beneficiary.

Using his own words against him 2– To promote the mirage of Stanford as a successful businessman, he frequently and publicly touted his supposed wealth, boasting of his billionaire status in the media, including interviews with Forbes and CNBC, and even a University of Houston commencement address (where Stanford also stressed the importance of integrity and warned that “BS may get you to the top, but it won’t keep you there.”

Gambling zinger– After the Napa Valley holiday, Stanford spent a week in January 2009 in Las Vegas, proving as successful a gambler as he was a businessman. Stanford burned through more than $515,000––again, all depositor money—at the Bellagio, both in gambling and jewelry for his then-girlfriend. After that trip, he went to Libya in an unsuccessful bid to obtain additional funds from the Muammar Gaddafi regime.

Here are the important points from Stanford’s response.

(His actual sentencing document is sealed.)

Government spin job– Continuing along a well-worn path the Government repeatedly replicates its now familiar, worn-out arguments using terms like “predator”, and files matters in the public forum in an attempt to further enrage public opinion by continuing to distort facts, and ignore reality. Their latest public filing again claims that Mr. Stanford orchestrated a Ponzi scheme and is now asking for time served…In filing such a document the Government is once again embarking in factual manipulations and “spin” worthy only of a political campaign for national office.

No Ponzi–Both of these cases further demonstrate why the Stanford companies were not a Ponzi scheme, unlike the individuals accused in those matters Stanford made real actual investments. He made investments in real estate, private equity; he invested and created foreign banks, foreign and domestic investment companies and airlines. There were investments, which among other matters created banks in Panama, Ecuador, Venezuela and Peru. Stanford also established investment companies in those countries and others countries such as Switzerland and Mexico.

http://blogs.wsj.com/deals/2012/06/14/allen-stanford-sentencing-the-arguments-from-both-sides/